As the crunch point sits less than a decade away, three distinct approaches to shore up Social Security funding have been tabled by lawmakers.
August 14 marks Social Security’s 90th anniversary – an achievement underscored by both its longevity and the scale of its impact.
Social Security was created during the Great Depression to provide financial security for Americans. Signed into law by President Franklin D. Roosevelt on August 14 1935, as part of the New Deal, it established a federal safety net funded through payroll taxes. It initially offered retirement benefits for workers aged 65 and older, with later expansions adding disability insurance and survivor benefits. The program’s goal was to reduce poverty among the elderly and stabilize the economy by ensuring a basic income.
More than 73 million Americans now receive benefits from the program, making it one of the most significant pillars of the nation’s social safety net.
But its future is far from secure. According to the latest report from the Social Security Trustees, the program’s two trust funds – the Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) funds – are projected to reach insolvency by 2034. At that point, benefits would be funded solely through incoming payroll taxes, triggering an automatic cut of around 21 percent unless Congress acts.
This is not the first time Social Security has faced a funding cliff. In the early 1980s, the trust funds were similarly close to depletion. Lawmakers responded with reforms that included faster payroll tax increases, a gradual rise in the retirement age, and taxation of some Social Security benefits. Those measures extended the program’s life, but four decades later, a new crisis looms.
Today, as the crunch point sits less than a decade away, three distinct approaches have been tabled by lawmakers.The Fair Share Act
Introduced by Democrats Sheldon Whitehouse and Brendan Boyle, the Fair Share Act is aimed at shoring up Social Security and Medicare by targeting the highest earners. The bill would require taxpayers with incomes over $400,000 to pay Social Security taxes on all wage, self-employment, and investment income above that threshold.
Under the current system, most taxpayers pay Social Security taxes on all their income – but because of the $160,200 wage cap, wealthier Americans stop contributing once they pass that amount in earnings.
„This legislation would significantly extend Social Security solvency and would extend Medicare solvency by an estimated 20 years“, Whitehouse and Boyle said.
